Preterm infants frequently suffer from pulmonary complications resulting in significant morbidity and mortality. Physiological and structural lung immaturity impairs perinatal lung transition to air breathing resulting in respiratory distress. Mechanical ventilation and oxygen supplementation ensure sufficient oxygen supply but enhance inflammatory processes which might lead to the establishment of a chronic lung disease called bronchopulmonary dysplasia (BPD). Current therapeutic options to prevent or treat BPD are limited and have salient side effects, highlighting the need for new therapeutic approaches. Mesenchymal stem cells (MSCs) have demonstrated therapeutic potential in animal models of BPD. This review focuses on MSC-based therapeutic approaches to treat pulmonary complications and critically compares results obtained in BPD models. Thereby bottlenecks in the translational systems are identified that are preventing progress in combating BPD. Notably, current animal models closely resemble the so-called "old" BPD with profound inflammation and injury, whereas clinical improvements shifted disease pathology towards a "new" BPD in which arrest of lung maturation predominates. Future studies need to evaluate the utility of MSC-based therapies in animal models resembling the "new" BPD though promising in vitro evidence suggests that MSCs do possess the potential to stimulate lung maturation. Furthermore, we address the mode-of-action of MSC-based therapies with regard to lung development and inflammation/fibrosis. Their therapeutic efficacy is mainly attributed to an enhancement of regeneration and immunomodulation due to paracrine effects. In addition, we discuss current improvement strategies by genetic modifications or precondition of MSCs to enhance their therapeutic efficacy which could also prove beneficial for BPD therapies.